Texas Franchise Tax Reduced
With all signs pointing to a continually strong state economy, Texas Governor Rick Perry has signed legislation that reduces franchise tax rates and maintains exemption for small businesses.
As a result of the Omnibus Bill, Franchise tax rates drop from 1 percent to 0.975 percent of taxable margin in 2014, and to .95 percent in 2015. For retailers and wholesalers, the rates drop from 0.5 percent to 0.4875 percent in 2014 and .475 percent in 2015.
The law also makes permanent the $1 million small-business exemption, repealing a proposed lower threshold of $600,000 in revenue to qualify for exemption. Thus, businesses with revenues under $1 million remain exempt from the franchise tax.
Not yet passed but still on the horizon, the threshold for exemption may increase as follows:
- Businesses with $5 million in total revenue in 2016
- $10 million in 2018
- $15 million in 2020
- $20 million in 2022
Stay up to date on the tax laws affecting your business by subscribing to our blog.